If you're planning to buy a house, managing your credit score is vital. Mortgage lenders use credit scores as a benchmark for qualification, and a lower score can hurt your chances of being approved for a mortgage.
Here are some more details about how credit scores affect your mortgage loan chances:
The customary loan application process requires a credit score of at least 620. It's possible to get a mortgage with a lower score, but you may have a higher interest rate as a result.
The loan officer obtains a single credit report containing all three credit report types. The lenders may use your credit score or lower middle credit score to decide if a joint partner applies.
Mortgage lenders require higher credit scores because they use it as a way to measure how well you handle outstanding debt. The higher your credit score is, the less risk you pose to their lending. You could end up saving thousands over the life of your loan and capitalize on a lower monthly payment.
It's possible to get a mortgage with a low credit score, but there are trade-offs to be aware of. With conventional loans, a lower credit score might require a higher down payment or private mortgage insurance.
Other loan options like VA loans or loans offered by the Federal Housing Administration have more flexibility when it comes to minimum credit score. However, these mortgage loans come with other specific requirements for approval.
Maintaining a good payment history and credit report will help you in more ways than just getting a mortgage. However, for a major purchase like a home, it's crucial to have the best possible financial standing before beginning the process.
Kate Hogan – Amherst MA Realtor ® and Pioneer Valley
Your number one source for Real Estate in Amherst, MA, and surrounding towns!
Kate Hogan, a 20-year resident of Amherst and Top Producer at Brick & Mortar realty, has that unique combination of qualities you need in an agent: a big picture view of the entire Five College area, towns, and neighborhoods, a high standard of professionalism, and an innate talent for understanding homes. All of that, plus this savvy agent is known for being experienced, knowledgeable, and a lot of fun to work with. As a full-time real estate professional, Kate’s approach is focused on getting to know her clients as real people and taking care of them from beginning to end.
